Wonga May Be Celebrating but Legal Loan Sharks' Profits Come at a Heavy Cost to Our Country

Whilst many businesses struggle to survive in our fragile economy, payday lender Wonga is one of our few home grown success stories. Today they announced they are making more than £1million a week in profit- a 36% increase on last year. No one could begrudge a company that works hard to serve their customers and is rewarded for it. But money made in this industry comes at a heavy cost to our country.

Payday lending has become the norm for millions as they try to manage having too much month at the end of their money. 80% of loans are for basics; Britons are putting their rents, mortgages, travel costs, food and heating bills on the tick to get through the week. Not everyone who borrows from these firms gets into financial trouble, but enough do as a result of the terms of the loan that such mega profits are achievable even in times of economic difficulty.

Their customers know how costly this credit is - 40% of those who took out a payday loan say it made their financial position worse. But many feel they have little alternative. Research by Which? shows half of all borrowers who have taken out a payday loan have borrowed credit they couldn't repay - with 57% having missed a payment and a quarter using it to pay off other forms of credit.

The damage these firms are doing to our country is not just to be seen today - it is destructive to our tomorrow as well. Whether investing in property, education or saving for old age, many are saddled with a level of personal debt that makes forward planning impossible. Families living under the shadow of £10,000 or more of unsecured debt cannot hope to offer their children the chances of their counterparts, nor cope with the costs of caring for their elders with dignity. Debt doesn't just harm everyday finances, it narrows horizons too.